Latvia will become the common currency area’s newest member in January 2014 — the same time that new tax laws go into effect allowing the country to compete with the likes of Cyprus and Malta. This could further destabilize the European economy.

(...) Riga’s planned reform has been designed to transform Latvia into the euro-zone’s next tax haven. And it highlights the degree to which rhetoric and reality diverge in the European Union.

Ever since the International Consortium of Investigative Journalists (ICIJ) exposed the vast scale of tax evasion undertaken by multinationals around the world, the European Commission has made combating financial trickery a top priority. Theoretically, at least. In practice, exactly the opposite has happened. “Instead of eliminating established tax havens, we have added a new one to the euro zone,” says Sven Giegold, a financial expert with the Green Party in the European Parliament.

July092013

Latvia gets Ecofin nod to become 18th eurozone memberNow it is officially - Latvia is going to be the second Baltic state which introduces euro. Estonia joined eurozone already in 2012, but Lithuania is planning to do it in a few years.

Arthur did not stop in France. The Arthurian knight Perceval and his quest for the Holy Grail – as told by Chretien de Troyes – became the German epic Parzival. In Italy, the world of King Arthur was painted on the walls of Renaissance palaces in Mantua and Ferrara.

In 19th-century culture, Arthur continued his pan-European reign. While the pre-Raphaelites were painting Arthurian myth, Richard Wagner was dramatising it as opera. What is fascinating is that all through this long European cultural history, the scenography of the legend remained Celtic and western British. Wagner's Tristan and Isolde is set in Cornwall and Brittany, just as the tales of Chretien mix Breton place names with places such as Carleon and Tintagel.

Arthur, British and European, should remind us who we are. We are Europeans, like it or not. Even when the whole continent is sitting in the Siege Perilous.

The currency may have been with us for 10 years now, but its visual blandness has signally failed to bind Europeans together

All it took was for Jay-Z, a member of US rap royalty, to flick a wad of €500 notes in a music video five years ago for people to wonder if the euro – visual shorthand for squareness – might one day become cool.

Would Andy Warhol's dollar screenprints give way to modern meditations on Europe's yellow € sign? Could the euro become more than a giant star-encrusted symbol outside Frankfurt's European Central Bank? Was it art? Europeans in the cultural world knew the answer was no.

1 January 2012 will mark 10 years since the euro coins and notes appeared in people's wallets. But as simple objects, pieces of design and branding, emotional items that bind us together, they are seen as a failure: a limp bureaucratic compromise where art was needed.

This was the first postmodern currency; it could have been visually extraordinary, combining the cutting-edge beauty of Dutch guilders and the design chic of the Swiss franc. Instead, the euro's visual blandness reflects its current identity crisis.

The euro is pure functionality in the extreme. So easy to pronounce, it has escaped the nicknames of its older cousins, the greenback and quid. (At the Maastricht summit, it was still called the ecu but Helmut Kohl thought it sounded too French – much to the relief of the Portuguese, as it also sounded like their word for arse).

The design was deliberately tepid. The notes feature neither people nor places, just bland, fake architecture that doesn't exist. Ten years ago the French economist André Orléan suspected this would become a problem: "Look at the symbolism: bridges and imaginary windows. The euro isn't anchored in the past, it's virtual, it doesn't correspond to any reality."

The French ethnologist Patrick Prado called it a "ghost money", with "no reference, no country, no past, no roots, no memory, defined by no value other than itself". He cautioned: "What will history make of this denial of images, this wiping out of the symbolic?"

The coins' national flipsides do give a nod to history, from Irish harps and Finnish swans to Leonardo da Vinci's beautiful Vitruvian Man on Italian cents. The French novelist Philippe Sollers has written about the joy of rummaging through loose change to find a coin bearing Cervantes that has travelled across borders into your pockets, with all the imaginary stories of how it got there.

In an ode to the euro in the Nouvel Observateur five years ago, he lauded the currency's silence: "The dollar bill is chatty, the euro is mute." Dollar bills shout: "In God We Trust." The staid euro would never dare quote Latin at you or suggest God was looking over your shoulder.

But Bruno Ninaber van Eyben, the designer who created the Dutch face of the euro coins, laments the "missed emotional opportunity". He hates the fact that the euro side of the coin shows a map and boundaries – and not even Poland and the members to the east.

"It shows borders, not what's inside them," he said. "That isn't what binds people together. There needs to be memory, emotional resonance, an idea of the future. The Romans understood this. When the coin bearing Augustus's face went all over Europe, there was a sense that people belonged to a group. They were not alone."

Erik Spiekermann, the German designer and typographer, adds: "It doesn't work as a brand. There's no intrinsic value in it. People aren't proud of it, they don't collect it. They just pay with it. It's like white bread, it won't harm you, but it doesn't nourish you either."

Is it a classic? "No. It would take another 20 years – if it lasts that long. You can't design a classic, something becomes a classic if it stays around. The dollar is a classic because of American cultural imperialism."

If half of the euro's neighbours, including many Balkan states, look up to it, others look down on it, not least the Swiss with their famously beautiful notes.

"It's ugly," says Pierre Frey, a Swiss art historian. "You have to look pretty hard to find such ugly inks. It's the image of the tempest that is currently shaking it."

September272011

I am not too sure, whether this trader is really as honest, as it may seem by a first superficial impression. May be he is right, that the Euro zone and the Euro itself will be collapsing within one year, but, what I really would question strongly, is that he is correct, when he states, that everyone has a realistic chance by using the down fall of the currency market to rescue his savings. It even is for me quite an effrontery as it is likewise a wrapped PR consequently following his own interest, that he dares to use the BBC programme for his IMO irresponsible proposals, and that obviously no one of the editorial staff of the news programme has the courage to invite someone from the meanwhile countless initiatives against the ongoing cynical abuse of tax payer bail out money, to confront the banking and the trader lobby with the inherent inconsistencies and consequences of this kind of argumentations: self fulfilling prophecy configured as a financial well positioned trap by hidden greed. //

September122011

“

[...]

Key agents in this drama were the bank technocracies, both national and international, and the European Commission. The vilains de la pièce
are the democratically elected governments (regardless of their
political inflection), who passively transferred constitutionally
relevant powers to such technocracies.

The ‘therapies’ based on fiscal austerity are the ultimate outcome of such a chain of decisions. It is said that they will stop speculative attacks. I argue that they will simply prepare fresh bases for new attacks, triggered this time by recession indicators and/or by the absence of relevant improvements in the debt/GNP ratios. There is only one way to frustrate such speculative attacks: rendering the ECB a lender of last resort for sovereign debt, as recently argued by P.De Grauwe, D.Gros, S.Micossi; that is, by restoring a pre-1980 institutional way of organising economic policy making. But the ECB resists such a suggestion, with the support of European governments.

As Susan George puts it bluntly: “The ECB is the obstacle to success, not the Euro per se. The ECB doesn’t lend to governments but to banks, at 1% or less, and then banks lend to governments ... The ECB unlike every other central bank doesn’t issue Eurobonds. So we have government by the banks and the ratings agencies”. And as for the polity abdication she adds: “Now the European Commission wants to examine all individual country budgets before their parliaments vote on them to make sure they meet certain standards. This is a blatant attack on democracy”.

This is a straightforward, though partial, answer to the question raised at the start of the debate on ‘The road to Europe’ by Rossana Rossanda, when she asks: Was starting from the monetary union the right strategy for building the political union of Europe? Mario Pianta has provided a further part of the answer by reconstructing, from a historical economic perspective, what has happened. What I want to explore further in this article is how this absurd process came about; that is, secured by which cultural distortions, wrong reasoning, and false popular beliefs.

September062011

“[...]

The state debt crisis became visible in the Dubai crisis in November 2009, but it has unfolded since 2010 in the European periphery. The huge imbalances within the Euro zone, which have been working well for the German export economy, are pushing the states of the periphery into bankruptcy. The 'Euro crisis', which returns in short intervals, is not a currency crisis – in comparison, the Euro is to date more stable than the Deutsche Mark used to be, in relation to the US Dollar the Euro is overrated, and it becomes increasingly important as a global reserve currency. The 'Euro crisis' is a crisis of the European banks, of political governance and of the EU itself. In particular, it is the structure of the EU itself which aggravates the crisis. It is not designed for a common European welfare and fiscal policy; the ECB independently decides about monetary policy, and is focused exclusively upon the stability of the Euro. Therefore the crisis has so far been managed by 'shadow governments in Brussels' and a 'state of permanent emergency to rescue the Euro'. The main burden is on the ECB, which rescued the banks by buying their junk assets. It bought the state bonds of the over-indebted states (for what it's worth breaking a cherished taboo by this), and at the same time putting pressure on these states to cut their public expenditure. But first of all, by its interest rate policies, the ECB tries to prevent workers from struggling and obtaining higher wages.

SEPTEMBER 1, 2011 UhrGoldman Takes a Dark ViewA Private Note to Hedge-Fund Clients Gives a Strategist’s View; Ways to Gain From Global Pain
BY SUSAN PULLIAM AND LIZ RAPPAPORT
A top Goldman Sachs Group Inc. strategist has provided the firm’s hedge-fund clients with a particularly gloomy economic outlook and suggestions for how these traders can take advantage of the financial crisis in Europe.
In a 54-page report sent to hundreds of Goldman’s institutional clients dated Aug. 16, Alan Brazil—a Goldman strategist who sits on the firm’s trading desk—argued that as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China’s growth may not be sustainable.
Among Mr. …
Quelle: Wall Street Journal

UBS' Stephane Deo, Paul Donovan, and Larry Hatheway have released a monster report (posted over at ZeroHedge) examining the consequences of a Euro breakup, a once unlikely-seeming outcome that now grows more likely by the day.

The first line basically nails it:

The Euro should not exist (like this)Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.

The report argues that basically the whole system, right from the start, was basically a lie:

Why consider break-up at all? Break-up occurs because the Euro does not work. Member states would be economically better off if they had never joined. European monetary union was generally mis-sold to the population of the Europe. In the 1990s the Euro was often characterised as an instance of foreign exchange rate integration – the Exchange Rate Mechanism without the crises. The advantages of no foreign exchange rate uncertainties or costs for trade and tourists were emphasised. Of course the exchange rate integration was probably the least of the consequences of the Euro. The most important consequence was the integration of monetary policy. The hint was in the name “European Monetary Union”. However, politicians sought to ignore that hint. A Euro that had been promoted on the idea of monetary union rather than exchange rate integration would have been far more difficult to sell to the electorate.

A monetary union is, economically speaking, a “good” idea if the membership constitutes an optimal currency area. This occurs under one of two conditions. Either the area is so homogenous that the component economies all move in the same direction at roughly the same speed, at the same time. Alternatively, the economies are sufficiently flexible that any differences in economic performance can be relatively swiftly corrected.

Ultimately, even at this dire moment, UBS still has a hard time seeing a breakup, calling some kind of fiscal union more likely. The major reason: It would just be too economically costly for anyone to depart.

The economic cost (part 1)The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak Euro country leaving the Euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That cost would then probably amount to EUR3,000 to EUR4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.

The economic cost (part 2)Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over EUR1,000 per person, in a single hit.